Stocks rebound after a bad day

Housing and earnings gains help the market begin to recover

Associated Press

Published 5:35 pm, Tuesday, April 16, 2013

Photo: Richard Drew

Image 1of/4

Caption

Close

Image 1 of 4

Michael Capolino, right, works with fellow traders on the floor of the New York Stock Exchange Tuesday, April 16, 2013. Stocks are sharply higher in early trading, a day after the market's worst drop this year, as the government reported a surge in home construction last month. (AP Photo/Richard Drew) less

Michael Capolino, right, works with fellow traders on the floor of the New York Stock Exchange Tuesday, April 16, 2013. Stocks are sharply higher in early trading, a day after the market's worst drop this year, ... more

Photo: Richard Drew

Image 2 of 4

Specialist Michael Pistillo, right, works with traders at his post on the floor of the New York Stock Exchange Tuesday, April 16, 2013. Stocks are sharply higher in early trading, a day after the market's worst drop this year, as the government reported a surge in home construction last month. (AP Photo/Richard Drew) less

Specialist Michael Pistillo, right, works with traders at his post on the floor of the New York Stock Exchange Tuesday, April 16, 2013. Stocks are sharply higher in early trading, a day after the market's worst ... more

Photo: Richard Drew

Image 3 of 4

Traders on the floor of the New York Stock Exchange observe a moment of silence, Tuesday, April 16, 2013, to honor the victims and families of the Boston Marathon bombings. Stocks are sharply higher in early trading, a day after the market's worst drop this year, as the government reported a surge in home construction last month. (AP Photo/Richard Drew) less

Traders on the floor of the New York Stock Exchange observe a moment of silence, Tuesday, April 16, 2013, to honor the victims and families of the Boston Marathon bombings. Stocks are sharply higher in early ... more

Photo: Richard Drew

Image 4 of 4

Traders on the floor of the New York Stock Exchange observe a moment of silence, Tuesday, April 16, 2013, to honor the victims and families of the Boston Marathon bombings. Stocks are sharply higher in early trading, a day after the market's worst drop this year, as the government reported a surge in home construction last month. (AP Photo/Richard Drew) less

Traders on the floor of the New York Stock Exchange observe a moment of silence, Tuesday, April 16, 2013, to honor the victims and families of the Boston Marathon bombings. Stocks are sharply higher in early ... more

Photo: Richard Drew

Stocks rebound after a bad day

1 / 4

Back to Gallery

New York

Strong housing and earnings reports helped stocks rebound from their worst day of the year.

The Dow Jones industrial average rose 157.58 points, or 1.1 percent, on Tuesday, to 14,756.78, winning back more than half of the 265 points it lost a day earlier. The Standard & Poor's 500 index logged its second-best day of the year.

Home construction topped 1 million last month, the highest level since June 2008. Robust earnings from companies including Coca-Cola also propelled the market higher.

A recovery in housing and a pickup in hiring were major catalysts driving the stock market's surge early this year. The Dow and the S&P 500 jumped 11.3 percent and 10.3 percent, respectively, in the first three months of 2013.

That run-up was interrupted Monday when stocks had their biggest decline since November. Worries about an economic slowdown in China led to a drop in prices for oil, copper, and other commodities, causing mining and energy stocks to fall. The rally had already slowed earlier this month after reports of weak hiring and retail sales suggested that the economy was cooling off.

More Information

"This is the first time in a while that we've had pretty positive numbers," said JJ Kinahan, chief derivatives strategist for TD Ameritrade. "We had one bad day yesterday. You can't say because of that one bad day that all bets are off."

While Chinese growth fell short of expectations, Monday's sell-off may have been disproportionate to the slight slowdown in China's growth.

The world's biggest economy still expanded at a rate of 7.7 percent in the first three months of the year, slowing from 7.9 percent the previous quarter and missing analysts' expectations by just 0.3 percentage points. China is watched especially closely because it is a major market for foreign goods from iron ore to smartphones and is relatively healthy.

Mining companies rose Tuesday as commodities markets stabilized and materials stocks gained the most of the 10 industry groups in the S&P 500 after leading the market lower the day before. Home builders advanced following the housing report. PulteGroup rose 75 cents, or 4.2 percent, to $18.60 and Lennar climbed 92 cents, or 2.4 percent, to $38.70.

The S&P 500 climbed 22.2 points, or 1.4 percent, to 1,574.57. It was the biggest gain since Jan. 2, when stocks rallied after lawmakers reached a last-minute deal to stop a series sweeping tax hikes and spending cuts from taking effect.

In other trading, the Nasdaq composite rose 48.14 points, or 1.5 percent, to 3,264.63.